Question

A Romer economy starts off with an initial stock of ideas equal to 100. The total population in the economy is 60, two of the workers are employed in the research sector, and the productivity parameter of the research sector is equal to 0.01. The stock of ideas in period 10 is equal to:

Answer 1

121.8994

Step-by-step explanation:

Given that:

1. Initial stock of ideas = 100
2. total population = 60
3. workers employed in the research sector = 2
4. productivity parameter = 0.01.

The stock of ideas in period 10 is calculated as:

`Stock of ideas = 100[1+(0.01 * 2)]^(10)\\ = 100 (1.02)^(10)\\ = 100(1.218994)\\= 121.8994.`

Therefore the stock of ideas in period 10 is equal to 121.8994